State-run oil and gas explorer ONGC, for long a laggard when it comes to productive spending, thanks partly to a yoke of subsidies on its shoulders, under-achieved in the first quarter of this fiscal also. It could spend just 68.29% of its total Plan outlay, or investment expenditure, in Q1, despite the Modi government, keeping in mind the country’s energy security, trying to keep the firm on its toes.
Disappointed with the performance, the petroleum ministry has asked the firm to not only make good the shortfall in the remaining period of the fiscal but also try and exceed the annual target. The ministry also told the firm to even out the plans over the three quarters beginning the current one. Investments were originally targeted to be front-loaded, with the smallest amount kept for the last quarter.
The Maharatna company spent just R6,041 crore in April-June against the target of R8,846 crore. At the same time, the targets for following quarters have been set at R7,075 crore (Q2); R9,557 crore (Q3) and R1,058 crore (Q4).
“ONGC has been asked to review the matter and to redistribute the quarterly targets. The achievement in the Plan Expenditure in FY14 was only 92.64%. Therefore, all efforts need to be made to ensure full utilisation of plan provisions in the current year,” a senior government official told FE.
FE has recently reported that given a huge fall likely in the under-recoveries of oil marketing companies this year, ONGC’s oil subsidy burden would reduce by a steep 40% to R39,200 crore. This is because the government has decided to share the subsidy burden equally between itself and the two upstream oil companies — ONGC and Oil India. The reduced subsidy burden is expected to enable ONGC to spend more for exploration and production. What has created this situation is the relatively soft crude prices and the progressive deregulation of diesel prices (which has reduced the under-recoveries on the fuel to roughly a tenth of it was in January 2013). Against about R1.4 lakh crore last year, the under-recoveries of oil marketers is expected to be less than R1 lakh crore this year.
Soon after Prime Minister Narendra Modi-led government has taken charge, ONGC's work is reviewed routinely. The petroleum ministry takes a review of the PSU firm across its different existing and ongoing projects in the first week of every